Estimating the degree of operating efficiency gains from a potential bank merger and acquisition: A DEA bootstrapped approach

George Halkos and Nickolaos G. Tzeremes

Journal of Banking & Finance, 2013, vol. 37, issue 5, 1658-1668

Abstract: We propose a bootstrapped Data Envelopment Analysis (DEA)-based procedure to pre-calculate and pre-evaluate the short-run operating efficiency gains of a potential bank merger or acquisition (M&A). As an illustrative example, we apply our proposed procedure to investigate the degree of operating efficiency gains of 45 possible bank M&As in the Greek banking industry over the period from 2007 to 2011. The results reveal that a year before and a year after the initiation of the Greek fiscal crisis, the majority of the potential bank M&As under examination were unable to generate short-run operating efficiency gains. In addition, our results for 2011 indicate that the majority of bank M&As can lead to short-run operating efficiency gains. Finally, the empirical findings support the view that a merger or acquisition between efficient banks does not ensure an efficient bank M&A.

Keywords: Data envelopment analysis; Bootstrap techniques; Mergers and acquisitions; Bank efficiency; Greek fiscal crisis (search for similar items in EconPapers)
JEL-codes: C14 C61 G21 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (55)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:37:y:2013:i:5:p:1658-1668

DOI: 10.1016/j.jbankfin.2012.12.009

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